Bond Duration:

Bond duration is a statistics that measures a bond's interest rate risk, i.e., how sensitive bond value is with respect to changes in interest rate. Two commonly used Duration measures are the Macaulay duration and the modified duration.

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The duration of the bond is 4.32 years.

We can use the following formula to compute the Macaulay duration:

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Interest Rate Risk: Definition, Formula & Models

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Chapter 3 / Lesson 6
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Interest rate risk is really the risk of two different events (price reduction and reinvestment rate reduction) caused by a change in interest rates. Interest rate risk affects bond investments, but the good news for bond investors is that it can be mitigated or eliminated.